Pubdate: Wed, 01 May 2013
Source: Denver Post (CO)
Copyright: 2013 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: Vincent Carroll
Page: 21A

YES, POT REVENUES WILL TOO COVER COSTS

The Smart Colorado representative was on a roll. "The latest research 
just confirms that marijuana proponents' promises to Colorado voters 
that Amendment 64 would be a financial gain to the state were empty," 
Diane Carlson declared. "Even if voters approve the 
recreational-marijuana tax, the new pot market could be a net drain 
on the state's budget, the study indicates. That means funds for 
education, roads and other top priorities could be diverted to 
marijuana regulation."

It would indeed be scandalous if what the anti-Amendment 64 group 
said were true. But relax. There is no reason to believe that if 
voters approve a 15 percent excise tax and a 10 or 15 percent sales 
tax this fall for cannabis that "the new pot market could be a net 
drain on the state's budget."

Moreover, the study that Carlson referenced, by the Colorado Futures 
Center at Colorado State University, offers no serious evidence for 
such a claim, either.

Quite the contrary. The study actually provides estimates for annual 
marijuana tax revenues-$91 million from a special sales tax of 15 
percent and $17.6 million from the existing 2.9 percent sales tax- 
that are far in excess of any conceivable regulatory or other 
expenditures related to legalization. For that matter, don't forget 
licensing fees.

Yes, the state Department of Revenue will need to take on staff to 
retool its tax collections, administer new levies and build up the 
new Marijuana Enforcement Division. And several other state agencies 
may well be burdened with new or slightly expanded duties, too.

But the Colorado legislative council has provided estimates of such 
costs for bills making their way through the General Assembly (House 
Bills 1317 and 1318, and Senate Bill 283) and they total less than $15 million.

Since the Colorado Futures Center in no way explains its report's 
"key finding" that "marijuana tax revenues may not cover the 
incremental state expenditures related to legalization," I asked the 
report's authors, Charles Brown and Phyllis Resnick, for help. It 
turns out, according to Resnick, the finding represents more of a 
worry expressed by some lawmakers and members of the governor's 
implementation task force than any careful analysis of actual data.

And while the task force did recommend state-funded prevention and 
education efforts related to cannabis use, its report offered no 
estimate of the appropriate amount. Nor did it try to quantify 
overall social costs from Amendment 64.

Or social savings, for that matter. After all, legalizing pot should 
reduce the number of violators processed through the courts. The 
Colorado Center on Law & Policy, a left-oriented group, projects "$12 
million in instant savings for the year following legalization 
because of reduced criminal costs."

In truth, no one can predict with precision either marijuana revenues 
or related expenditures because there are so many unknowns. How many 
local governments will allow retail sales, for example, and how fast 
will they approve a retail roll-out? And will marijuana consumption 
surge or mostly involve existing users moving out of the black market?

If sales and thus tax revenues are lower than expected, however, at 
least the regulatory costs should shrink as well.

The Colorado Futures report does include some clever calculations 
regarding the likely cost of retail cannabis, concluding it will be 
slightly cheaper than the black market even with the proposed taxes. 
That's good news for those who want to defund drug dealers.

On Tuesday, the state House approved a bill under which the marijuana 
sales tax, if endorsed by voters, would start at 10 percent, with a 
15 percent cap. But that would still raise about $30 million, 
according to legislative staff-more than enough to pay for state 
expenditures even after local governments take their cut.

Smart Colorado may just have to find some other way to alarm us.
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MAP posted-by: Jay Bergstrom